Hospital Audit Report Reveals Financial Effects of COVID, Information Technology Conversion
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on Wednesday, November 24, 2021
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Spencer Hospital ended the fiscal year with a 3.3 percent negative operating margin as outlined in the annual audit report presented at November’s hospital board meeting. However, John Toale, of Winther, Stave and Co. LLP, assured hospital trustees that the hospital remains in a strong financial position due to years of fiscal responsibility.
Toale advised that in addition to lower volumes and greater expenses related to the COVID-19 pandemic, the hospital also experienced additional costs associated with a major information technology conversion project, all which contributed to the negative operating margin.
He reported that Spencer Hospital’s total margin was a positive 5.8% when including allowances for hospital investment activities and federal government support payments to mitigate the financial impact of the COVID-19 pandemic.
“The COVID-19 pandemic has presented financial challenges to healthcare entities across the nation,” said Spencer Hospital president Bill Bumgarner. “Fortunately, the hospital’s strong balance sheet and the financial support from the federal government allowed the hospital to keep its healthcare team employed and to continue to invest in new technology, facility improvement and additional services.”
Bumgarner said that though meeting the healthcare needs of the community has been a primary focus over the past year, the hospital has continued to invest in technology and services for the benefit of the region. A complete informational technology conversion occurred in March, creating a common electronic health record for patients seeking services at Spencer Hospital, several local medical clinics and with Avera Health specialists.
During the past fiscal year, the hospital also opened its expanded wound care center that includes hyperbaric oxygen therapy and upgraded the linear accelerator at Abben Cancer Center, which is used for radiation therapy.
“The successful transition of the hospital’s information technology system required many hours of training and preparation prior to the change and continues. I’m proud of the hospital’s healthcare team for its dedication over the past year and throughout the pandemic to care for our community during an unprecedented time while also supporting projects that will improve care and services in the future,” said Bumgarner.
Spencer Hospital’s audited financials shows the hospital’s revenues totaled $106,066,103 for the year ended June 30, 2021. The revenues included $103,254,326 in net patient revenue and $2,811,777 of other operating revenue. The hospital does not receive any tax revenues from the city.
Expenses for the year totaled $109,524,060, including $47,217,993 in salaries and benefits, $55,902,080 for supplies, services and other costs, and $6,403,987 for depreciation expense on the hospital’s plant and equipment.
“The audit report also reminds us each year that Spencer Hospital consistently reinvests its net revenues back into healthcare services,” said Bumgarner. “That investment, in addition to the fine work of the hospital’s talented medical staff and skilled healthcare team, results in the Spencer medical community being recognized as one of the finest in the State of Iowa.”
Below is a condensed statement of revenues and expenditures for Spencer Hospital for the year ended June 30, 2021 (in thousands):
| Operating revenues............................................................................. |
$106,066 |
| Operating expenses............................................................................ |
(109,524) |
| Operating income (loss)............................................................... |
(3,458) |
| Non-operating income (expenses)..................................................... |
9,484 |
| Income before contributions........................................................ |
6,026 |
| Capital Contributions......................................................................... |
88 |
| Change in net position................................................................. |
6,114 |
| Net position - beginning of the year................................................... |
109,368 |
|
|
| NET POSITION - END OF YEAR........................................................... |
$115,482 |
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A copy of the audit report is available for review in the Office of Auditor of State and the hospital administrator’s office.